Labour's new Brexit policy is an unsatisfactory half-way house

Labour has now committed itself to supporting essentially the Norwegian model – at least for quite a long temporary basis – for the UK’s relationship for the UK strategy post March 2019. If achievable, there is one tangible advantage to this strategy. It would provide the UK with continuing “free movement” access to the Single Market. Because we are already EEA members in our own right, we would not have to run the risk of not being accepted into the club, thus providing some certainty which might otherwise be lacking. There are also, however, major disadvantages which, in the end, might make Labour rue endorsing this approach as being a smart tactical but poor strategic choice.

Most obviously, if we remained in the EEA, we would still be to a greater or lesser degree justiciable by the Luxembourg Court, we would remain under free movement of people obligations and we would very probably have substantial membership dues to pay every year. It is true that EEA Single Market obligations on these key issues are not as tightly binding as those required by full EU membership, and that, with goodwill all round, some derogations could be negotiated or – failing that – simply adopted unilaterally by the UK. How far the UK could push this flexibility is, however, unknown, thus producing less certainty about the future than everyone wants. We would also have no say in the way the Single Market develops, although we would regain our seats on the world bodies where much world trade regulation is formulated.

If, as is also proposed by the new Labour policy, the UK stays within the Customs Union, this will preclude us from negotiating free trade details on our own. It will also effectively lock us into the Common Agricultural Policy, thus ruling out reductions in tariffs on agricultural products which could be of major benefit, especially for poorer people who spend more of their family budgets on food than those who are better off.

The real problem with the EEA approach, however, is that its successful implementation would depend heavily on EU goodwill, which may not be forthcoming. Whereas the Government’s Lancaster House policy of leaving the Single Market, the EEA and the Customs Union could be implemented unilaterally by the UK – with a free trade deal offered to the EU but with mutual WTO terms being acceptable to the UK if the EU would not agree an FTA – an EEA-based deal depends to a much greater extent on EU co-operation being available. In particular, it would leave the issue of the divorce bill unresolved.

It may be that the Brexit negotiations will stall over this issue in any event or, at the very least, that so much time will be spent on arguments about the financial settlement that both the UK and the EU will run out of time, pushing both sides into a temporary agreement, which could in fact then be the EEA option. Having the EEA approach on the table to provide a way out of the impasse which might otherwise ensue would then be an alternative to the hard Brexit outcome, which would be the other choice. This is why the EEA option it is gathering support. This still does not, however, overcome its major disadvantages.

The main problem, as Norway has found, is that being in the EEA provides neither the benefits of full EU membership nor those of full independence. It is an unsatisfactory half-way house, with just the sort of obligations which the UK electorate voted against in the referendum last June. It is likely to be very expensive, will not provide us with judicial independence or resolve our immigration problems. Staying the Customs Union will deprive us of the opportunities to enhance the 60% of our trade which we do outside the EU and will keep us in a protectionist bloc with high food prices. In return all we will get is “free movement” access to the Single Market, which is very similar to what can be secured by the free trade deal approach, which gets rid of the other encumbrances.

In June 2016, the UK electorate voted by a small but decisive majority that the UK should leave the EU. Staying in the EEA, unless there are much larger derogations than seems at all likely, is not likely to be seen by this majority as following through the democratic decision which was taken by the British people, or as consistent with Labour’s recent election manifesto commitments. The danger for Labour is that, by supporting now a deal which provides a compromise with which most party members can live, and which satisfies the short term need for business security, the UK may adopt a strategy from which it is very difficult to emerge, and which in the end satisfies no-one – and for which Labour gets blamed.